Channel 5 will achieve ad revenues of pounds 99 million in its first
year, mostly at the expense of Granada and Carlton TV, a study by the
stockbroker, Goldman Sachs, says.
The new station, which is expected to launch in January 1997 and
initially cover 58 per cent of the UK population, should take a three
per cent share of total TV viewing, or 5.6 per cent of commercial
impacts, in its first year. Goldman says this will rise to 4.5 per cent,
or 8.2 per cent of impacts, in 2002, when its coverage will rise to 72
Channel 5 should start with a 3.8 per cent share of total commercial ad
revenue, based on an initial 35 per cent discount on ITV, and achieve
7.3 per cent by 2002, by which time the discount will have narrowed to
15 per cent.
Granada and Carlton will see their profits shaved by pounds 12 million
and pounds 16 million, respectively, as a direct result, the report
MAI Group, the other major ITV force, will be less affected because
Channel 5’s penetration will be minimal in its broadcast regions of
Anglia and Meridian.
The report received a mixed reception from media buyers. David Cuff,
broadcast director of Initiative Media, labelled it ‘very pessimistic’.
He added: ‘GMTV, which only broadcasts for three and-a-half-hours in the
morning, will take pounds 93 million in 1997. [This report] is saying
Channel 5, with 24 hours at its disposal, will only take six or seven
per cent more. I think it will be very disappointed if it does not get
pounds 150 million.’
However, Bill Barker, broadcast director of J. Walter Thompson, took the
opposite view, predicting first-year revenues of between pounds 65
million and pounds 85 million.
The award of the Channel 5 licence to Channel 5 Broadcasting is
currently the subject of a judicial review, which was instigated by one
of the losing contenders, Virgin Television. It could delay Channel 5’s
launch by up to one year.